Stat of the Week Winner: April 20 – 26 2013
Congratulations to Tony Cooper for his nomination for Stat of the Week:
Statistic: New Zealand has been placed 26th out of 68 countries in a global ranking of life expectancy in retirement.
The Bloomberg data is wrong. They have incorrectly calculated “average number of years residents of 68 countries around the world can look forward to after they stop working.”
It’s a Bloomberg story but the data is being reproduced in NZ for Kiwisaver investors. For example http://media.gmi.co.nz/mailouts/morganOnline/2013/MorganOnlineApr2013.htm.
What Bloomberg have done is subtract the average age of retirement from the life expectancy at birth to calculate “sunset years.” For example, for NZ males this is 78.8 – 65 = 13.8.
But according to NZ Stats Dept figures released last week the life expectancy for NZ males at 65 is 18.8 – a big difference.
The error that Bloomberg made is that you can’t calculate life expectancy at age 65 from the life expectancy at birth. 65 year-olds have a better life expectancy than newborns since they have survived 65 years whereas newborns have a chance of dying before 65.
People think they must take retirement in the US at 70.5 years or pay taxes. Wrong. Must take an amount that makes it zero at death. US tax rules use the 99th percentile to calculate how much of a retirement nest egg you must withdraw At 70.5 years my the 99th percentile life expectancy is 89 and just taking interest at 4.5% will cover me until 74.
There is no penalty at any time but if you are 50 and have 38 years to live, amount you can take is usually small.
12 years ago